What Is Stamp Duty Tax and Is It Refundable?

Stamp Duty is a UK property tax you pay when you purchase a property or a piece of land.  

Otherwise known as Stamp Duty Land Tax or SDLT, it applies when people buy properties over a certain price in England and Northern Ireland – Scotland and Wales have slightly different schemes but the principles remain the same.  

How much you pay in Stamp Duty will depend on the purpose and value of the property you want to purchase, as well as the type of buyer you are - e.g. first time buyer, previous homeowner, or landlord. 

There are a few misconceptions surrounding Stamp Duty, but that’s just because not everyone knows that much about it - especially those who haven’t really dealt with the property market before, or for many years.

So, remember these points:

• The buyer of a property, not the seller, pays Stamp Duty. You never pay Stamp Duty when you sell. You may however have to pay Capital Gains Tax when you sell a property that's not your main residence
• Stamp Duty exemption areas don’t exist. Whether you qualify for an exemption depends on your situation and the value of your property
• You don’t pay VAT on Stamp Duty as it’s a tax in itself. Also, you don't pay VAT on the purchase of a property

You can't deduct Stamp Duty from Income Tax, even on buy to let properties. However, you can deduct it from your taxable gains to reduce the Capital Gains Tax you pay when you sell a property 

From 1st April 2025 the standard SDLT threshold for 0% Stamp Duty was lowered from £250,000 to £125,000. This means that there is now a 2% Stamp Duty charge on properties costing between £125,000 and £250,000.

If you’re looking for an easy way to calculate how much Stamp Duty tax you’ll have to pay, you can use our simple calculators:

• For standard residential properties, try our Stamp Duty Land Tax Calculator
• If you’re a first time buyer, see our First Time Buyer Stamp Duty Calculator
• If you're a landlord and are buying a buy-to-let property, use our Buy-to-Let Stamp Duty Calculator

You pay Stamp Duty Land Tax when you purchase land or property.

HMRC must receive payment of Stamp Duty within 14 days of completion.

No, Stamp Duty can't be paid before completion. The tax only becomes due once the property purchase is legally finalised, which is on the day of completion. 

However, you don’t need to worry about handling this yourself in most cases. Your solicitor or conveyancer will usually deal with the Stamp Duty return and arrange payment on your behalf as part of the completion process. You’ll just need to make sure the funds are available in time. 

By law, the SDLT must be paid and the return submitted within 14 days of completion, or you could face penalties and interest.

To pay Stamp Duty you simply fill out an SDLT return and send it to HMRC. Your solicitor normally handles this for you at the same time they manage the transaction and submits the money to HMRC after completion.

No, Stamp Duty must be paid in full within 14 days of completing your property purchase. There isn’t currently an option to pay it in instalments. 

In most cases, your solicitor or conveyancer will handle the payment for you as part of the transaction. They’ll collect the full amount from you in advance to ensure it’s paid on time, avoiding any penalties or interest. 

If you’re concerned about affordability, it’s worth speaking to your solicitor early on. While the tax itself can’t be paid in stages, they may be able to advise on other ways to manage the upfront costs involved in buying a property.

No, you can’t add Stamp Duty directly to your mortgage in the same way you might with legal fees or other costs. 

Lenders usually require you to cover Stamp Duty separately, as it's a tax paid upfront on completion. While some buyers do end up borrowing a bit more overall to help with upfront costs, this isn’t the same as officially adding Stamp Duty to the mortgage loan itself. 

If covering the cost is a concern, it’s a good idea to speak with a mortgage broker early on. We can help you plan your finances and ensure you're fully prepared for all the costs involved in buying a property.

The original reason we used to pay Stamp Duty was to cover the cost of the legal documents required when you purchase a property. The name comes from the physical "stamp" of approval that the Government used to impress upon your paperwork. Most documents are digital now and don’t require an actual stamp, but you still pay Stamp Duty. 

Nowadays, Stamp Duty is normally more than is needed to cover the costs of the documents – the Government mainly uses SDLT as a means of gathering revenue, rather than simply processing paperwork. 

An example of a document you need is a Certificate of Land Ownership, which officially transfers the ownership from the previous occupier to you. HMRC will only issue this to you upon the receipt of Stamp Duty.

Almost everyone who purchases a property above a certain value pays Stamp Duty. There are certain exceptions, but whether you qualify depends on what kind of buyer you are. 

You pay normal Stamp Duty when: 

• You're not a first time buyer and you purchase a main or second residential property, buy to let or piece of land worth over £250,000 (£125,000 from 1st April 2025) 
• You purchase a new main residence to replace your previous one – this doesn’t include remortgaging 
• You marry and then buy a property with your partner – even if one of you is a first time buyer 
• You previously owned a property, but sold it and now rent or live with friends or family, and are buying another property 
• You buy a shared ownership property 
• You’re a first time buyer and you purchase a property valued over £625,000 (£500,000 from 1st April 2025) 
• You purchase a non-residential property above £150,000 
• You buy mixed-use land or property above £150,000 
• You’re being added to a mortgage and title deeds – this is considered as "buying" a share of property or land 

You also pay a Stamp Duty surcharge – otherwise known as Additional Stamp Duty – when: 

• You purchase a second residence 
• You’re a private landlord and you purchase a buy to let 
• You purchase a buy to let through a limited company

You’re exempt from Stamp Duty if:

• You receive land or property ownership in exchange for any payment or other consideration as stipulated by HMRC - e.g. through divorce
• A property is left to you in a will - instead of paying Stamp Duty on inherited property, you pay Inheritance Tax

There are Stamp Duty relief options for:

• First time buyer purchasing a property up to £500,000 (from 1st April 2025)
• People purchasing multiple dwellings where a transaction, or several linked transactions, include freehold or leasehold interests in more than one dwelling
• Situations where a building company buys an individual’s home and the individual buys a home from the building company
• Employers that purchase an employee’s home because they’re moving with their work
• Compulsory purchases, such as when a council purchases a property to sell it on to a property developer
• Instances where a property developer is subject to planning obligations
• There is a transfer of property between companies
• Charities that purchase land and property for charitable purposes
• Right to Buy properties where a residence is sold at a discount by a public-sector body or there’s a Preserved Right to Buy – the Stamp Duty on Right to Buy properties is worked out on the discounted price the buyer pays
• Certain situations in which registered social landlords buy land or property

You pay Stamp Duty at the standard rates if you sell your house and buy another.

You still pay Stamp Duty on shared ownership properties even though you only buy a portion. In fact, you pay Stamp Duty at the current rates on the total value of the home.

Example

After 1st April 2025, you buy a 50% share in a property with a market value of £300,000 for £150,000 and you're not a first time buyer. You have to pay Stamp Duty on the full £300,000, not your £150,000 share.

You’ll pay:

• 0% on the first £125,000 = £0
• 2% on the next £125,000 = £2,500
• 5% on the final £50,000 = £2,500
• Total SDLT = £5,000

You pay Stamp Duty on new builds like you would on any other residential property, but many people think you don’t. There’s no exemption criteria specifically relating to new build properties.

You can only reclaim Stamp Duty if you meet specific eligibility criteria.

You may be able to claim a Stamp Duty refund if you purchased a new main residence without selling your previous residence, but then sold that previous residence within 3 years. The refund would only be for the additional 5% surcharge for a second home, not the standard SDLT amount. Find out more in our guide: Stamp Duty on Second Homes.

The 3 year Stamp Duty rule is where if you sell or give away your previous main residence within 3 years of buying your new home, you can apply for a refund of the additional Stamp Duty you paid when purchasing your new property.

In some cases, you may be able to claim a refund on Stamp Duty Land Tax (SDLT), but it depends on your circumstances. 

One common reason is if you’ve paid the higher rate for an additional property and then sold your previous main residence within 3 years. In this case, you can apply for a refund of the surcharge. 

To claim back Stamp Duty, you’ll need to: 

1. Complete an online form on the HMRC website 
2. Submit it within 12 months of selling your previous home, or within 12 months of the filing date of the original return — whichever comes later 
3. Provide relevant details, including the original transaction reference, property addresses, and amounts paid 

If a solicitor handled the original payment, they may be able to help with the refund process too. It’s a good idea to act quickly and keep all related documents to hand.

Looking for tips on how to avoid Stamp Duty isn’t advisable. It’s a tax you simply have to pay. You may be fortunate enough to qualify for certain exemptions. If not, remember that Stamp Duty avoidance schemes aren’t the same thing. They’re also often unreliable. If they’re deemed as being against HMRC rules, then you’ll likely have to pay the Stamp Duty anyway – plus any penalties or charges incurred.

It’s our duty as a mortgage broker to protect our clients, which is why we advise you to speak with a qualified accountant about tax.

Stamp Duty is a tax that must be paid. If you don’t pay the full Stamp Duty Land Tax due to HMRC by the deadline, you’ll face a fine. You’ll have to pay the full original Stamp Duty amount as well as any interest that has accrued since the deadline has passed.